As the new financial year approaches, taxpayers often face a crucial decision: should they choose the old tax regime or the new one? This choice can significantly impact your tax liability. With the recent introduction of the new tax regime, understanding its intricacies has become even more important.
Numerous exemptions and deductions, including the standard deduction, HRA, and LTA, are available under the previous tax system. For those who are able to use them effectively, these benefits can significantly lower taxable income.
Although the majority of these exemptions and deductions are eliminated, the new tax regime offers reduced tax rates, which streamlines the procedure. The objective of this regime is to simplify tax computations for those with limited deductions to claim.
The tax slabs for the two regimes for AY 2024–25 and AY 2025–26 are quickly compared here:
Old Tax Regime:
New Tax Regime:
Your capacity to claim deductions and exemptions under the previous system, as well as your specific financial condition, will determine which tax regime is best for you.
Utilize a tax calculator intended for AY 2024–25 and AY 2025–26 to ensure you make an informed choice. These calculators provide a clear comparison of your tax liabilities under both regimes by taking into account a number of criteria, such as your income, deductions, and exemptions.
As AY 2025–2026 draws near, it’s critical to review your annual tax regime selection. Which regime is better for you may vary depending on your investment strategy, tax law revisions, or changes in your financial condition.
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